What Every C-Level Executive Should Know About Talent Acquisition

In today’s highly competitive, fast-paced business environment, having the right people fully engaged in key positions can make all the difference in the success of an organization. Increasingly, however, achieving that goal is becoming much more difficult. Despite persistently high unemployment numbers, organizations looking to fill specialized roles in IT, accounting/finance, healthcare, engineering and design are finding a shortage of qualified candidates. In a recent Economist Intelligence Unit (EIU) survey of 235 C-level executives, more than half of survey respondents indicated that they believed “insufﬁcient talent within the organization as a whole” could harm their company ﬁnancially. A “lack of alignment of individual and business objectives” and “low employee satisfaction” were also cited as areas of concern.

At the same time, contingent staffing is on the rise as more organizations seek flexibility to meet market demands. Spend under management, the total spend of contingent (temporary) labor that is managed by a technology or alternative service rather than being managed by the corporation itself, is also growing rapidly. A report by Staffing Industry Analysts indicated that spend under management reached $100 billion in 2011, a 16 percent increase from 2010 and indicative of a larger overall growth trend. These solutions, typically implemented in the form of vendor management systems (VMS), managed vendor systems (MVS) or managed service providers (MSP), are extremely attractive on the surface for their ability to control costs, standardize workflows and improve consistency in contingent workforce hiring. But what about their ability to source qualified talent?

A recent survey of hiring managers and executives across a range of industries provides compelling evidence that spend under management doesn’t always add up for talent acquisition.

Systems-based solutions exhibit lackluster talent performance.Approximately half of the hiring managers and executives surveyed currently use VMS/MVS or MSP solutions. The chief advantages cited by those using the systems are a faster hiring process, lowered costs and decreased workload as well as tracking and reporting capabilities. However, when asked about the performance of these solutions, only one out of four survey participants rated performance across all attributes as very good or excellent. Hiring managers and executives were also neutral on the performance of automated talent acquisition systems in identifying candidates—only one-third rated the quality of candidates that are hired as very good or excellent. In general, the performance of VMS/MVS and MSP solutions is meeting but not exceeding expectations. Only one out of three survey respondents rated the overall performance, ease of use or effectiveness of these systems as extremely positive. On average, respondents work around the established process of a VMS/MVS or MSP 34% of the time.

Commoditization doesn’t work with people.When asked about the primary challengesof VMS/MVS and MSP solutions, the highest response was the sourcing of unqualified candidates or candidates who are a poor fit for the organization. High turnover and a lack of engagement were common complaints. Other challenges cited include lack of communication and contact, lack of understanding about the company/industry or job requirements, loss of control, inflexibility, complexity and an inadequate database.

When it comes to identifying the best talent for an organization, even the highest performance systems created by the most experienced software development teams have a fatal flaw: The systems aren’t human. No matter how many variables are programmed into the system, the system itself can’t reason or assess all of the nuances involved in talent acquisition. When these systems are implemented and managed by people who don’t understand the art of talent acquisition, the results are almost certain to fall short of expectations.

When talent matters, human involvement on a personal level is essential.Approximately half of all survey respondents said they prefer to work with a combined hiring solution using both an automated system and a specialized staffing/recruiting agency, noting that both methods have advantages for different requirements. VMS/MVS or MSP solutions can fill positions quickly that require less skilled or less specialized employees, while specialized staffing/recruiting agencies were preferred for higher skill sets and more specialized recruits who require more time and effort to identify.

An additional 23 percent of those surveyed indicated that they prefer to work only with a specialized agency because of the agency’s ability to source high-quality candidates, target specific needs, and provide clear communication and better control of the process.

For organizations that require specialized skills and top-level talent to remain competitive, relying on systems alone is not enough. Finding the right people is an art that requires the honed instinct of experienced recruitment professionals.

Your thoughts are spot on, George. As a speciality firm I cannot tell you how frustrated hiring managers who work for companies with a VMS/MSPs are. I agree that for the right skill sets such as admin or light industrial these systems may (or may not) make sense (assuming they are well run), but for speciality positions they are just a complete failure. As an industry, and those who represent us, we need to stop tolerating this. Ultimately we are judged by the business issues we solve by providing quality talent. VMS and MSP's are focused on commodity pricing and processes that provide up front savings but ultimately are costing the customers they serve more by poor talent, high turnover and lack of employee and vendor engagement. Just take a look at the Net Promoter scores for VMS and MSP providers. The staffing industry is a wonderful industry that can add value to both companies and peoples lives everyday, however if we continue to allow MSP and VMS providers, and the companies that procure their services, to poorly manage the talent supply chains we are giving ourselves a self inflicted black eye.

[…] Sourcing of unqualified candidates or candidates who are a poor fit for an organization can be a primary concern of VMS/MVS and MSP users. And George Albert Optiz, presdient of Brightwing, writes in The Staffing Stream that when talent matters, human involvement on a personal level is essential. For the post, click here. […]